MANAKCOAT - Manaksia Coated Metals & Industries Ltd Share Price

The management of Manaksia Coated Metals & Industries Limited provided an optimistic outlook during the earnings conference call following the un-audited financial results for Q3 and the nine-month period ended December 31, 2025. They emphasized the company's strong business momentum and strategic initiatives aimed at growth.

For Q3 FY '26, consolidated total income decreased by 9% year-on-year to INR 190 crores, largely attributed to a planned plant shutdown for technology upgrades. However, EBITDA rose by 7% to INR 19 crores, with an EBITDA margin expansion of 144 basis points to 10%. Net profit increased significantly by 47% to INR 7 crores, translating to a net margin of 4%.

For the first nine months of FY '26, total income grew by 15% to INR 580 crores, while EBITDA surged 67% to INR 77 crores, with a margin increase of 356 basis points to 11%. Net profit for the nine months soared 241% to INR 35 crores, achieving a net margin of 5%, with EPS standing at INR 3.49 per share.

Looking ahead, the management outlined several forward-looking points:

1. The successful commissioning of the Aluminium-Zinc coating technology upgrade led to a 36% capacity increase, reaching 180,000 tons per annum.
2. A new color coating line slated for early FY '27 will expand overall coating capacity by 174%, reaching 236,000 tons per annum.
3. A 7-megawatt solar power plant is expected to commence in Q1 FY '27, potentially offsetting 50-55% of grid power consumption, enhancing sustainability and energy cost savings.
4. The company has an export order book of approximately INR 350 crores and anticipates strong domestic demand as construction activities pick up, projecting robust growth momentum.

These factors collectively position the company favorably for continued growth and robust performance in the upcoming quarters.

Question: For how long was the shutdown in the facility?

Answer: The planned shutdown lasted for close to 35 days. This period allowed us to upgrade all critical equipment and perform a thorough overhaul of the facility. I'm proud to say that our technical team executed this seamlessly, and we restarted operations without any yield losses or rejections.

Question: How will rising metals prices impact our raw material costs and margins?

Answer: Rising metal prices, especially for zinc and aluminium, have increased to levels of $3,200 to $3,500 per ton. This directly affects our material costs. However, we can pass on these increases to our customers in the same or the following month, ensuring that our margins remain stable.

Question: How will the India-EU FTA impact us, given that 50-60% of our revenue comes from Europe?

Answer: We are optimistic about the long-term benefits from the recent India-EU FTA. While it hasn't specified benefits for steel yet, recent statements imply preferential treatment for steel products. As the specifics unfold, we expect our strong export position to capitalize on this opportunity.

Question: What is the outlook for demand from Europe and domestic markets?

Answer: The demand from the EU remains robust. In the first nine months, exports accounted for 67% of our revenue. As for domestic demand, it has picked up significantly since December, and we expect this trend to sustain strongly until July, given ongoing construction activities.

Question: Do we have any disadvantages in duties or restrictions compared to other countries?

Answer: India does not have any disadvantages in exporting to the EU compared to countries like Korea or Japan. We have a level playing field, with India having strong capacities that allow for significant exports, unlike some competitors who primarily focus on their domestic markets.

Question: How will the new pre-painted capacity affect margins in Q4?

Answer: While the new pre-painted capacity may be less than our Alu-Zinc production in Q4, transitioning from galvanized to Alu-Zinc typically allows us to command better margins due to lower production costs and a premium on Alu-Zinc products. We anticipate margins to remain favorable.

Question: What revenue do we foresee from the new Alu-Zinc capacity in Q4 FY '26?

Answer: Q4 will see the benefits of our increased Alu-Zinc capacity, but not fully, as we will gradually ramp up production. We estimate realizing between 25% to 35% of the total capacity increase in Q4.

Question: How much revenue loss occurred due to the shutdown?

Answer: It's challenging to quantify the exact revenue loss due to the shutdown since it's dependent on both production levels and commodity prices. However, our capacity utilization dropped to 68% in Q3 from over 80% in previous quarters, indicating a significant impact.

Question: What is the price realization difference between Alu-Zinc and pre-painted products?

Answer: The price realization for pre-painted Alu-Zinc is in the range of INR83,000 to INR85,000 per ton, while for Alu-Zinc alone, it ranges from INR71,000 to INR73,000 per ton. This implies a difference of roughly 13% to 14%.

Question: What is our current liquidity situation and funding plans?

Answer: We have a strong liquidity position with underutilized working capital. Our funding plans prioritize a balanced debt-equity ratio, supported by internal accruals and minimal external funding requirements for ongoing projects like the pre-painting line and solar project.